If you need an attorney and don't have one, the Lawyer Referral and Information Service can help.
Call Us Monday - Friday from 8:30 AM - Noon and 1:15 PM - 3:00 PM at (814) 459-4411.
As is explained in Trusts, a “living trust” is a written document that sets up a new entity (the trust) and can direct how assets you deliver to that trust will be handled during your life. Like a will, a living trust can also direct how assets in the trust will pass upon your death and name a person responsible for administering the trust.
Generally, it is best to consult with an attorney who has experience helping people with estate planning concerns. That gives you a chance to review your situation, ask questions and express your wishes. You and the attorney can then decide how best to accomplish all that. Accomplishing your objectives, not a particular tool, is most important.
Facts versus Fiction
Increasingly, people are being solicited to draw living trusts. Often, people are led to believe that a living trust is the only way to accomplish things or terrible things will happen unless a person has a living trust. Much of what is being said simply is not true.
• With or without a living trust, you need a will. Even if a living trust makes sense, it governs only those assets actually delivered to it. Everything else passes under a person’s will. Without a will, State law, not your intentions, will govern.
• A living trust usually costs more than any probate fees might be. Today, probate fees in Erie County for an estate of $1 million are $1,000. That’s a lot less than what you’ll pay for a living trust agreement.
• A living trust will not save any federal estate tax or Pennsylvania inheritance tax. Whether your assets pass under a will or under a living trust, these taxes, if due, must be paid.
• With or without a living trust, bills get paid before heirs receive distribution and legal requirements cannot be avoided. While some claim that a living trust will assure that your heirs receive money more quickly upon your death, the fact is that assets have to be collected and often sold; debts and taxes must be paid and no living trust can change that. Unfortunately, it is those you want to help who end up learning that this is true. And unlike an estate administration, the trustee under a living trust does not receive legal protection from potential claims when assets are distributed.
• A living trust does not necessarily save legal costs upon your death. Because much of the same work has to be done after the death of a person who leaves a living trust as is done in an estate administration, the costs are about the same.
• A living trust can make things more complicated during your life. Because a living trust makes sense only if assets are delivered to it, this can involve formal transfer of title in real estate, vehicles, bank and investment accounts and other assets. If the intent is that everything pass under a living trust, this has to continue as new assets are acquired. Self-help packets and the mass of paper and forms that solicitors of living trusts hand out seldom are understood, and people often forget to take important actions as a result.
Focus on Your Objectives
This is not to say that a living trust never is a good idea. If you own real estate located in another state, delivering title to that real estate to a living trust may avoid difficulties with probate laws there. Some people having particularly large or complex estates can benefit from a living trust. As with everything else, defining and accomplishing your objectives is most important. If you consult with a lawyer, he or she can help with suggestions as to how to do that.
If you need an attorney and don't have one, the Lawyer Referral and Information Service can help.
Call Us Monday - Friday from 8:30 AM - Noon and 1:15 PM - 3:00 PM
at (814) 459-4411.